This past October, Ciena announced its new coherent DSP, dubbed Wavelogic Ai. Ciena used the announcement to convey its coherent 100G+ roadmap and support for 400G. Ciena also hinted at important changes to its 100G+ business model as Wavelogic Ai is introduced to customer networks. These changes also cascade into the 400G component supply chain.

Wavelogic Ai doubles down on Ciena’s strategy of vertical integration of the DSP and optics, and extends it further into the control plane. The company continues to eschew the use of outside suppliers like Acacia, NTT Electronics, or Clariphy. We believe Ciena’s vertical integration is the company’s strategy for successfully competing with commodity hardware and dis-aggregated networks.Requires Optical Active Insight subscription.

Lightwave quotes Andrew Schmitt in its article regarding the acquisition of Clariphy Communications by Inphi:

Andrew Schmitt, founder and lead analyst at Cignal AI, believes that Inphi may not be comprehensive enough to take full advantage of its pending new assets. In particular, combining optical components (which Inphi currently doesn’t have) with the ClariPhy DSPs to create modules and other subsystems would make a stronger play, Schmitt believes.

“Strategically, I think it makes sense for someone like Inphi,” Schmitt said on a Piper Jaffrey analyst call earlier this year in regard to a potential Inphi/ClariPhy tie up. “I would argue that it makes more sense for an optical component company to take that approach – someone like an Oclaro, an NEL Photonics, or a Finisar. Because then they can, in essence, deploy the same model that Acacia has deployed. That is, being able to closely couple all the optics and the DSP to sell a full subsystem. Whereas Inphi can’t really do that.”

Andrew Schmitt gave an update on the optical equipment and component market during an investor call hosted by Troy Jensen of Piper Jaffray on Tuesday, October 4. Sixty-eight investors participated. An extended Q&A session followed Andrew’s presentation, and topics of interest included:

Andrew Schmitt presented at the ECOC (European Conference for Optical Communications) in Dusseldorf, Germany during the week of Sept. 19. No time was wasted during the trip as Andrew fit in well over 30 scheduled meetings with component and equipment suppliers and end users of optical hardware.

The meetings were very productive and we gained new insight in several areas:

Huawei’s plans to transition to 100G CFP-DCO technology and what will follow

Updates on vendor selection and R&D in coherent DSPs

Details on the ongoing ramp in CFP2-ACO and the development of this new market

The optical networking world finally gets a close up view of Acacia’s performance as the company is filing for an IPO. The most recent S-1/A filing by Acacia includes 2015 financial details, which we review through the lenses of Cignal AI’s customer and market knowledge in order to create a fine-grained view of the company’s performance and qualitative outlook. This analysis includes a detailed projection of customer composition for 90%+ of revenue, market share within entire 100G market, and estimates of ASPs beyond what is included in public documents.Requires Optical Active Insight subscription.

Clariphy announced a new 16nm silicon platform designed to be the foundation for future 400G coherent DSP designs.

“Coherent metro and datacenter inter-connect (DCI) network deployment is ramping now. This is a more cost sensitive market; CFP2-ACO and merchant DSPs are key technologies that will enable deployment in these new metro and DCI applications,” said Andrew Schmitt, lead analyst at Cignal AI. “ClariPhy’s LightSpeed-II 200G Coherent DSP along with its CFP2-ACO module partners are demonstrating solutions today that designers can use now.”